General Assembly audited financial accounts 2004/05
Introduction from Council of Assembly
Over the past 12 months, one of the Council’s key priorities has been to move the Church from the challenging financial situation it was in, to a sustainable position where expenditure does not exceed income.
The result for this year – an operational deficit of $756,000 before one-off items – compares with the budgeted position of a $660,000 deficit (noting that the budget excluded a number of items) and is significantly lower than the $1.2 million deficit that was forecast in February of this year.
Key points from the audited financial results include:
- Operating deficit of $756,000 before one-off items
- Significant increase in operational expenditure
- The parish appeal raised $150,000
- Equity increased by $692,000 over the previous year
- Revaluation of fixed assets was $1.8 million
- Borrowings of $419,000 from the Presbyterian Foundation at June 2005
Parish commitment to national ministries and support services was demonstrated through $150,000 in generous contributions to the appeal, which includes $52,000 from Te Aka Puaho. We thank you for this support.
The quality of this year’s General Assembly accounts is reflected in the fact that auditor’s fees have reduced by over 50 percent in comparison to last year, and that we have timely audited accounts.
Throughout 2004/05, we, as Council and through the Administration and Finance Policy Group, have been intentional about communicating financial information. Getting these results to the wider church in a timely manner is part of our continuing commitment to keeping everyone up-to-date.
Supplementary information from the co-conveners of the Administration and Finance Policy Group follows, and we ask that you take the time to read this.
Going forward
General Assembly is moving to a sustainable setting, and we recognise that there are still matters to be addressed such as the review of the School of Ministry and the review of the Assembly Assessment mechanism.
There is still a way to go in terms of our goal to move the Church to a position that is financially sustainable in the long term. We are encouraged that the tools and way of working are now in place and, together with these results, will go a long towards producing balanced budgets for 2005/06 and beyond.
Kerry Stotter – Convener
Helen Bichan – Deputy Convener
23 September 2005
Supplementary information
Overview
This has been a year in which the General Assembly has moved toward a more sustainable financial position. On a comparable basis, the deficit has nearly halved to $756,000 before one-off items, from $1.4 million in 2003/04 (see table 1 below).
Table 1: Operating deficit before one-off items
| 2004/05 | 2003/04 | |
| Operating deficit before one-off items | ($756,000) | ($1,372,000) |
| CWM change in accounting policy* | ($582,000) | |
| Joint venture expenditure write-off | ($317,000) | |
| Operating deficit (refer Audited Accounts, pg 1) | ($1,338,000) | ($1,689,000) |
* change in policy explained over page
This compares with the budgeted deficit of $660,000 (which excluded a number of items such as depreciation on buildings, and trust income or expenditure) and is significant progress towards the balanced budget that is targeted for the current year of 2005/06.
The deficit for this year is considerably lower than the $1.2 million deficit anticipated in February this year after the financial results for the first six months had been considered. At that time, we took urgent action to manage the financial risk.
Comparison of operational deficit before one-off items with February financial forecast
Key changes from the February forecast:
- + $ 268,000 – parish appeal and gain on the sale of property
- + $ 63,000 – additional trust and other income
- + $120,000 – insurance administration income that was omitted from February forecast
- Lower costs achieved through specific expenditure cuts were offset by unbudgeted depreciation, an increased doubtful debts provision and higher than expected staff costs.
Highlights
The key points for the year ended 30 June 2005 are:
- Operational deficit of $756,000 has almost halved in comparison to last year
- Operating expenditure decreased significantly
- Parish appeal raised $150,000
- Increase in equity of $692,000 compared to 2003/04
- Property assets increased in value by $1.8 million
- Over $200,000 was saved through the specific expenditure cutbacks implemented shortly after the half-year results were known
- Council of World Mission expenditure of $582,000 resulting from a change in accounting policy (see below for more details)
- The provision for doubtful debts was $523,000 of which $457,000 was budgeted (see below for more details)
- Borrowings from the Presbyterian Foundation were $419,000 at June 2005
Income
(refer to note 1d in the notes to the financial statements)
After allowing for the change of accounting policy relating to insurance (refer next item), the increased level of income shown in the Statement of Financial Performance was largely due to inclusion of the Beneficiary Fund within the Assembly Assessment (previously paid separately). In the middle part of the 2004/05 financial year, Assembly Assessment collected was around 78 percent of that invoiced. By year end, this has moved up to a little over 90 percent. Increasing the rate of payment of Assembly Assessment will continue to be a focus for 2005/06.
The other significant contributor to the increased level of income was the $150,000 generously given by parishes and individuals in response to the Council’s appeal for funds. This includes a $52,000 contribution from Te Aka Puaho.
Insurance Fund
(refer to note 1d in the notes to the financial statements)
The previous insurance arrangement terminated in 2004. Historically, the total insurance revenue and premiums paid that flowed through the Insurance Fund had been incorporated within the General Assembly’s accounts. Effectively from 1 August 2004 the Insurance Fund has operated as an independent entity and is no longer included with the General Assembly’s financial accounts. A $119,000 service fee for administration of the Fund was received in 2004/05 year (see summary Statement of Financial Performance over the page).
Council for World Mission
(refer to note 1d in the notes to the financial statements)
The change in accounting treatment of Council of World Mission funds recognises that there is a liability to repay the funds if they are not used for the purpose given. In the future, income and expenditure will match in the Operating Statement in any financial year. This approach removes the volatility that has been seen in our financial accounts in recent years.
Financial impact of General Assembly 2004
There was specific income and expenditure related to the General Assembly in September 2004 that was not incurred in the previous year. This is reflected through registration fees for General Assembly inflating income in 2003/04 and conversely, higher travel costs in 2004/05 year also related to General Assembly.
Provision for doubtful debts
(refer to note 4 in the notes to the financial statements)
An allowance of $956,000 (2004: $580,000) has been made for the possible non-payment of money owed to the General Assembly. This figure comprises monies owed from prior years, unpaid Assembly Assessment, and ministers’ loans that have remained unpaid for six months or longer. We, and Council, remain committed to recovering those monies owed to General Assembly. This is a conservative figure and should the full provision not be required, it would then be reduced.
Expenditure
Expenditure was lower in 2004/05 year in respect of grants ($378,000), communications ($147,000) and beneficiary & seniority allowances. Staff costs were higher ($273,000), which relates to higher costs associated with the disestablishment of the mission resource team and temporary staff required to complete the 2004 accounts and the new finance system. Communications were lower ($147,000) because of the increased use of email and by deliberately reducing costs.
Summary Statement of Financial Performance for year ended 30 June 2005
| Description | Actual June 2005 ($000) | Adjusted* Actual June 2004 ($000) |
| Assembly Assessment ( see table 2 below) | 3,669 | 3,297 |
| United Congregations | 315 | 340 |
| Investment income | 707 | 917 |
| Property Income | 367 | 336 |
| Service Income | 507 | 440 |
| Gifts, Donations | 721 | 497 |
| Gains sale property | 118 | 102 |
| Insurance net | 119 | 325 |
| Income** | 6,523 | 6,254 |
| Staff costs | 2,297 | 2,024 |
| Beneficiary & Seniority allow. | 1,325 | 1,492 |
| Travel | 323 | 267 |
| Property & computer | 712 | 761 |
| Communication | 297 | 444 |
| Other | 1,046 | 980 |
| Grants | 1,279 | 1,657 |
| Expenditure | 7,279 | 7,626 |
| Actual Deficit ( see table 1 above) | -756 | -1,372 |
| CWM change accounting policy | -582 | 0 |
| Joint venture write-off | 0 | -317 |
| Operating Deficit | -1,338 | -1,689 |
| Trust balances transferred | 0 | -808 |
| Revaluation Investment property | 163 | 33 |
| Revaluation properties | 1,867 | 1,313 |
| (Decrease) / Increase in Equity | 692 | -1,151 |
*The 2004 accounts have been adjusted to include the Beneficiary Fund income and expenditure of $1,090,000 to assist in comparison. The Insurance income and expenditure has been netted off.
** This figure is after reducing the equivalent figure in the Statement of Financial Performance (Audited Accounts) by $523,000 included there as the expenditure item, provision for doubtful debts.
Table 2 below reconciles the level of Assembly Assessment in the summary above, with the amount shown in the audited accounts.
Table 2: Assembly Assessment reconciliation
| 2004/05 | 2003/04 | |
| Assembly Assessment (Audited accounts, pg 1) | $4,507,000 | $2,930,000 |
| less Uniting Congregations | ($315,000) | ($340,000) |
| less Doubtful debts (Audited accounts, pg 1) | ($523,000) | ($383,000) |
| Adjusted Beneficiary Fund income | $1,090,000 | |
Going forward
The Administration and Finance Policy Group has been receiving regular monthly accounts since late 2004, which has been a big step forward. We can now exercise our stewardship of Assembly’s financial resources, based on good quality and timely financial information.
We have an eye to the future, and the results for the year ended 30 June 2005 have some potential implications for 2005/06. Some of the key aspects are noted here:
- The underpayment of Assembly Assessment continues to be a notable risk for 2005/06
- There will be a gain of $360,000 from the sale of Laughton House in the 2005/06 financial year
- There will be one-off costs in 2005/06 associated with securing appropriate office accommodation for Wellington-based Assembly employees due to the sale of Laughton House
- Means of repaying the borrowings from the Presbyterian Foundation will need to be considered in the near future
- After comprehensive work, a balanced budget has been adopted for 2005/06 and the Church’s financial position is being monitored monthly.
Points of clarification or questions about the financial results and position for the year ended 30 June 2005 can be addressed to either of the co-conveners.
John Trainor
Ian Watson
Co-Conveners Administration and Finance Policy Group